City of Farmers Branch v. Matsushita Elec. Corp. of America
| Decision Date | 05 May 1976 |
| Docket Number | No. B--5551,B--5551 |
| Parties | CITY OF FARMERS BRANCH et al., Petitioners, v. MATSUSHITA ELECTRIC CORPORATION OF AMERICA, Respondent. |
| Court | Texas Supreme Court |
Durant, Mankoff, Davis & Wolens, Ronald M. Mankoff, Dallas, for petitioners.
Thompson, Knight, Simmons & Bullion, Jerry L. Buchmeyer, Dallas, for respondent.
This case involves an interpretation of Section 10 of Article I of the Constitution of the United States, which provides in part that,
'No State shall, without the Consent of Congress, lay any Imposts or Duties on Imports of Exports . . .'
The City of Farmers Branch assessed a nondiscriminatory ad valorem tax on merchandise stored in warehouses within its limits. In 1972, it assessed such a tax on the merchandise here in question. It had been imported from Japan and Puerto Rico and was the property of Matsushita Electrical Corporation of America, a wholly owned subsidiary of a Japanese corporation of a similar name.
The property had come to its destination in Farmers Branch, but was still in its original corrugated cartons. Matsushita declined to pay the tax. In this declaratory judgment suit, its contention is that the tax on its property is unconstitutional under the above provision of the Constitution of the United States.
Because of the earlier decision of the Supreme Court of the United States which this court is bound to respect, we at first upheld the position of Matsushita. The Court of Civil Appeals had held the property was not subject to taxation by the city, and we upheld that decision by refusing a writ of error with a notation, 'no reversible error.' 527 S.W.2d 768. Upon the same day upon which our court acted, January 14, 1976, the United States Supreme Court announced its decision in Michelin Tire Corporation v. Wages, 423 U.S. 276, 96 S.Ct. 535, 46 L.Ed.2d 495. We thereafter granted a writ error upon rehearing. It is our opinion that under Michelin, the tax of the City of Farmers Branch is not an unconstitutional tax. In the words of the Michelin decision, an '. . . assessment of a nondiscriminatory ad valorem property tax . . . is not within the constitutional prohibition against laying 'any Imposts or Duties on Imports . . ."
The property which is the subject of the tax consists of Panasonic units and parts manufactured by or for Matsushita in Japan and Puerto Rico. The items were packed in sealed corrugated cartons and were shipped to the United States in sea vans. After the sea vans reached their port of entry, they were shipped by rail to Fort Worth. The seals on the sea vans were broken at Matsushita's warehouse in Farmers Branch, and the individual cartons were there unloaded and stored. No manufacturing, repairing or servicing is carried on at the Matsushita warehouse. The warehouse is used only to store the merchandise until needed by retail dealers. The disputed items were all in their unopened corrugated cartons.
The 'original package doctrine' had its origin in Brown v. State of Maryland, 25 U.S. 262, 6 L.Ed. 419 (1827), in which Chief Justice Marshall wrote:
'When the importer has so acted upon the thing imported that it has become incorporated and mixed up with the mass of property in the county, it has, perhaps, lost its distinctive characteristic as an import, and has become subject to the taxing power of the state; But while remaining the property of the importer, in his warehouse, in the original form or package in which it was imported, a tax upon it is too plainly a duty on imports to escape the prohibition in the constitution.' (Emphasis supplied.)
Brown v. Maryland was enlarged upon in 1871 by Low v. Austin, 13 Wall. 29, 80 U.S. 29, 20 L.Ed. 517, which is characterized by the Supreme Court in Michelin as 'the leading decision of the Court holding that the States are prohibited by the Import-Export clause from imposing a nondiscriminatory ad valorem property tax on imported goods until they lose their character as imports . . .'
In Michelin, however, the Supreme Court, upon its own initiative, carefully...
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